Category Archives: Loot Box (video game gambling)

Casino Watch Focus has reportedon the ongoing battle by legislators and video game companies over the highly controversial loot box mechanics that many see as out right gambling being marketed to children and older gamers alike. Its now being reported that revenue generating from micro transactions in video games could almost double over the next four years. An online investment source explains:

A new study from Juniper Research forecasts that loot boxes and skins gambling, two emerging gaming growth sectors, will reach a total spend of $50 billion by 2022, up from under $30 billion this year. Loot boxes are in-game packs which contain a random selection of items; while skins are in-game cosmetics which change the appearance of weapons or characters.

The new research, Daily Fantasy Sports & In-game Gambling; Skins and Loot Boxes 2018-2022, found that skins gambling should be of great concern to regulators. Frequently utilized as virtual currency for betting, skins are then cashed-in for real money via online trading platforms.

Research author Lauren Foye explained: “Skins are acquired both through playing video games and from opening purchased loot boxes. These items have value depending on rarity and popularity within game communities. On PCs, skins are traded for real money via Steam’s ‘Marketplace’; the platform has 125 million registered users globally.”

These grown numbers are especially troubling when one understands just how prevent these transactions are accessible by children. In the US, many legislators have taken notice and started discussions and legislation formation to address the issue. In the UK, the amount of kids identified as having already participated in skins gambling is beyond troubling. The article continues:

A 2017 study by the Gambling Commission found that 11% of 11-16 year olds in the UK had placed bets with skins; meaning around 500,000 children under the age of 15 could be using skins for gambling. Juniper finds skin gambling risks being pushed underground; without further counter-measures, wagers will surpass $1 billion globally by 2022, a fifth of the global market seen prior to Steam’s interference.

Juniper strongly recommends regulation for skin trading and gambling, in an attempt to both prevent youth participation and remove malicious actors who run sites which steal skins or short-change users.

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Casino Watch Focus has reportedon the ongoing issue of loot boxes in video games. Many seek to label them as gambling and want to see the appropriate regulations in place. The game that brought the issue to light was a Disney owned property, Star Wars and the game EA produced, Battlefront II. Hawaii legislator Chris Lee candidly referred to the game as an online, Star Wars themed casino, designed to take kids money. Since the issue has become more clearly understood, more legislators have pressured the industry for the appropriate protections moving forward. Most recently, US Senator Maggie Hassan wrote an open letter to the ESRB, the video game self-regulator body, asking them to address the issue before bodies like Congress had to step in to offer protection. The ESRB finally released a statement outlining a new policy, and it should come as no surprise that their recommended actions do absolutely nothing to protect consumers or adequately inform parents as to the dangers of loot boxes, or even to their inclusion in games for that matter. Forbes very precisely breaks down the situation and comments from Sen Hass demonstrates why the ESRB’s suggested policy action wont advance protections in any meaningful way:

The ESRB made an announcement yesterday that it will now start labeling games that sell loot boxes. The problem? It will also be labeling games that sell /anything/, loot boxes, microtransactions, boosts, even DLC, using one, catch-all “In-Game Purchases” label.

The issue that was immediately pointed out by everyone was that nearly every game on the market contains “in-game purchases” in 2018, so this will be a sticker slapped on pretty much all titles, barring perhaps some indies. Hassan herself even saw this as a pretty obvious dodge, saying this after the announcement was made:

“While today’s announcement of the creation of a new ‘In-Game Purchases’ label and the ESRB’s response to my letter are a positive step for parents and consumers, I am still concerned by the ESRB’s skepticism regarding the potentially addictive nature of loot boxes and microtransactions in video games. I will work with all relevant stakeholders to continue oversight on these issues and ensure that meaningful improvements are made to increase transparency and consumer protections.”

The ESRB very clearly understood that people would see through such meaningless actions, so they attempted to preemptively address everyone’s criticism. As Forbes points out, their response was nonsense and it’s incredibly obvious that the industry won’t be attempting to address the issue unless legislative bodies like Congress force them to protect children from this form of gambling:

The ESRB anticipated that it would get flack for not targeting loot boxes specifically with this move, and president Patricia Vance said this in its defense:

“I’m sure you’re all asking why aren’t we doing something more specific to loot boxes,” Vance said. “We’ve done a lot of research over the past several weeks and months, particularly among parents. What we’ve learned is that a large majority of parents don’t know what a loot box is. Even those who claim they do, don’t really understand what a loot box is. So it’s very important for us to not harp on loot boxes per se, to make sure that we’re capturing loot boxes, but also other in-game transactions.”

This is, of course, nonsense. While the ESRB is setting up a site to better educate parents on in-game spending in addition to this new “in-game purchases” sticker, the point is that the ESRB is totally ducking the real issue here. They still want to get /nowhere/ near declaring loot boxes gambling and doing something drastic like making all loot box-infused games M or AO rated, so this is their incredibly phoned-in compromise.

To me, this is about as useful a gambling regulatory body (run by the casinos, not the government) informing you that a stay at a casino will cost you money, but without differentiating between spending cash on food, blackjack, drinks, poker, hotel rooms or slot machines. Kids can order food and drinks and stay at the hotel, but they can’t gamble for obvious reasons. But the ESRB with its new system is lumping /all/ forms of spending together in a way that is bound to do nothing but confuse parents even further, obscuring the real issue.

It is absolutely absurd that the ESRB is creating a system that would group something like /Horizon Zero Dawn/’s Frozen Wilds [Downloadable Content (DLC)] in with something like /Battlefront 2/ loot boxes. This “solution” is totally glossing over the crux of the issue, which is not that players are able to spend money past the $60 asking price of a game, but that /the way/ in which they’re asked to spend money has often been honed by psychologists to ensure it’s as addicting, if not more so, than traditional gambling. But the ESRB is not touching that with a ten foot pole, relying on the old argument that since nothing of “actual value” is won during this gambling because the items are digital, that it isn’t gambling at all. And yet there is nothing psychologically addictive about wanting to buy DLC for a game you’ve purchased, while there certainly is for players, often children, that are spending dozens, hundreds, or thousands of dollars on randomized, slot-machine-like loot box rewards across the majority of releases today.

So yes, the ESRB did something that is essentially nothing, and it’s clear they’re not going to be a player in this fight unless legislation forces them to change their tune.

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Casino Watch Focus has reported on the discovery and evolution of gambling-esque loot boxes in video games and the legislative response to such predatory practices. Loot boxes are a type of micro-transaction where a video game player spends real money to open a box or chest in a video game, and hopefully win a valuable prize. If this sounds an awful lot like slot machines, then you’re thinking the same as countless fans, journalists and now legislators that are worried about he addictive and predatory nature of such a mechanic, especially when kids freely play these games. Hawaii legislator Chris Lee has lead the charge to hold the video game accountable and many others have taken note. As promised, Hawaii has now released 4 new bills that seek to regulate these predatory micro-transactions. An online source reports:

Four new bills have been introduced in the past month that target the sale of games that sell loot boxes for real money. Two of the bills would prohibit developers from selling games with randomized loot box reward systems to anyone under the age of 21. The other two would require developers to label games that use randomized loot box systems /and/ to disclose loot box drop rates.

Developers would be forced to label games should they include “in-game purchases and gambling-like mechanisms which may be harmful or addictive,” according to the bill. A game purchased online would have to include this information on the game’s art.

“Whistle-blowers have revealed that psychologists are employed to create these mechanisms,” Lee told the Hawaii Tribune. “If enough of the market reacts, the industry would have to respond and change its practices.” Lee said that more than half of the states in the United States are looking intro legislation regarding the sale of loot boxes in video games. Loot box regulation has already begun overseas as well. In 2016, China passed legislation that requires all developers to publish its loot box odds. Likewise, the Belgium Gaming Commission has deemed loot boxes “dangerous.”

Lee has been pushing the industry to impose its own common sense legislation. The ESRB is the rating system used within the industry and as of now, they are unwilling to view loot boxes as gambling and thus, they haven’t been willing to take the matter seriously or regulate from within. During a normal public meeting about the bills, lobbyist from the Entertainment Software Association, the industries trade group and regulators of the ESRB rating system, flew out to participate in the Q&A. They were unable to answer, justify or address some of the most basic concerns raised by Lee. It was objectively a very terrible showing for the industry. You can find the full video and update on Lee’s direct YouTube channel HERE (Loot box update begins at 2:37 and the questioning begins at 7:00).

Moreover, in addition to large number of states that are looking into similar legislation, these predatory gambling practices have now caught the attention of the US Senate, specifically Senator Maggie Hassan. She has questioned the FTC and wrote a letter directly to the ESRB. Forbes reports:

This week, Hassan asked four FTC nominees the question: “That children being addicted to gaming — and activities like loot boxes that might make them more susceptible to addiction — is a problem that merits attention?” To which all four responded yes, it was something they would look into. But past that, Hassan wrote a lengthy letter to Patricia Vance, president of the ESRB citing that the issue of loot boxes was brought to her attention by a constituent.

“While there is robust debate over whether loot boxes should be considered gambling, the fact that they are both expensive habits and use similar psychological principles suggest loot boxes should be treated with extra scrutiny,” Hassan’s letter says. “At minimum, the rating system should denote when loot boxes are utilized in physical copies of electronic games.”

The fact that Hassan is a US Senator, not a state senator, is important, as this could end up leading to her proposing federal legislation about this issue, rather than individual states doing it.

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